Power Lunch - Stocks trade marginally lower after hotter-than-expected inflation data 8/14/25

Episode Date: August 14, 2025

The Dow slipped on Thursday, after a new inflation report showed that wholesale costs rose more than expected in July. We’ll cover all of the market angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Some inflation is running hot, but the market pulling up Taylor Swift and shaking it off. Welcome to Power Lunch, everybody. I'm Brian Sullivan. A surprise jump in producer prices, spooking stocks for about a minute. Markets barely moving, even as some prices paid by companies went up more than expected, some way more. The headline inflation number did rise more than 3%. The biggest year-over-year move since February, but stocks still sitting right at record highs or making new highs. We'll talk about more and why in a moment. Also, here's a stock story you need to see. Investors, howling about Terawolf shares that are booming. They made a power deal with Google. It's also taking a stake in Terawolf. That is not a misquote. That stock is up

46%. The CEO and founder, Paul Prager, will join us exclusively in a few minutes to talk more about that. All right, so welcome, everybody. Great to have you with us on this busy Thursday stocks turning positive, at least on the NASDAQ just minutes ago, the market clearly focusing more on the AI and tech trade rather than the inflation data and the Fed. But is that the right focus? And where are stocks heading from here? Well, we welcome Ed Yardinney to Power Lunch. He is founder and head of your identity research. Ed, great to have you on. Thank you very much. All right. Why do you think the market is not reacting a little more negatively to the hot

inflation read and a lowered expectation of more Fed rate cuts in the future? Well, I think the market hasn't given up on the idea that the economy is actually resilient, that it doesn't necessarily need lower interest rates, and that if we get lower interest rates, that's just icing on the cake. The cake itself is pretty tasty, and that's evidenced by today's initial unemployment claims, which continue to indicate that the economy is doing well, the sense that nobody's getting, not nobody, but layoffs remain extremely low. It is taking longer to find jobs, according to the continuing claims. But overall, the latest labor market indicators are pretty good.

And so it's conceivable that the next payroll number will show continuing improvement. I know everybody freaked, well, everybody freaked out about the downwind revisions in May and June, which Brian actually made sense, that with all the uncertainty, the employers would stop hiring. But then in July, we actually saw an increase relative to May and June. And I think we could have another one in the August numbers. I was going to say, if the labor market stays strong and inflation on the wholesale level is running a little bit hotter, is there a case for a rate cut? You kind of just said there's no, why cut rates when those things are what they're supposed to combat, but they're not happening?

Brian, I think that's the question of the day. And the market over the past few days have indicated the answer is yes, yes, the Fed needs to cut. And there's been actually the Treasury Secretary said maybe they need to go 50 basis points and not just 25 basis points. And then we get today's PPI and we get today's initial unemployment claims. And maybe the answer is hold on a minute. Let's think about this some more. Yeah, I've been in the Nunn and Dunn camp for, 2025. So I'm sticking with it. And so I'm all set to be wrong here if the consensus, which still remains that there's going to be a rate cut as September holds. But between now and the September 16, 17, the FMC meetings can happen. There are a lot of data points that still can be released. And we have the Fed and Jackson Hole next week. We'll talk about more on that with Steve Leesman. In a moment, you referenced cake earlier. Aside from the fact that now I want cake, let's stay on that. Because then if we got a rate cut in September, Ed, even if we didn't need one, is that just frosting?

Like, does it even, will it, will it provide another leg higher for stocks by sort of goosing, sweetening the market, or does it not matter for the equity markets? Because as we're seeing today, they're going to, Manny's going to do Manny, right? To quote the Red Sox, the markets are going to go up. Well, it's, I think, increases the chances we'll have a melt-up. And meltups are great on the way up. The problem is that they do set you up for a meltdown by definition. You don't have meltups without having meltdowns.

And we already have a very high valuation multiple. We started out the year at around a 22 forward PE on the S&P 500, and then people started to worry about Deep Seek at the end of January, and then about Trump's tariffs that might cause a recession. And as a result of that, the PE got, fell sharply down to 18. It was a correction. It wasn't a bare market. And here we are back at 22, and we could go higher. And let's not forget that during the tech bubble, we went up to 25. We're not that far away from that kind of level. And so we're already in quasi-melt-up territory,

inflated valuation territory. I don't think we want to get this bull market out of control. to the upside because then it creates a lot of problems. But what's interesting about this bull market, Ed? And we could make all the fundamental cases we want about valuations being at or near records about all the money that's come into the market, et cetera. But guess what? This is not a U.S. phenomenon. Correct.

Japan, Taiwan, South Korea, most of Europe, they're all hitting or at new highs as well. It's like an entire global meltup. Yeah. Well, you know, since 2020, I've been talking about the possibility that this decade would turn out to be the roaring 2020s. And during the roaring 1920s, the excitement in the U.S. was palpable also overseas. It was a global phenomenon. And we may very well be seeing the same thing now.

And the excitement, to a large extent, may be related to AI. That's where all the excitement is, most of the excitement is in the United States. And I think you're seeing it in other parts of the world. It is extraordinary, as you noted, to see what's going on here in the face of geopolitical turmoil, including still Russia, Ukraine, Middle East isn't at peace yet. And, of course, we've got the tariff issue. And yet, as you point out, stocks are at a record high. I think it just also speaks to the fact that there's an enormous amount of liquidity in the system. So there's an enormous amount of wealth.

Let me look. Just look ahead to tomorrow. If we get some kind of very positive outcome on Russia, Ukraine, I have no idea what that looks like, no idea what that would be. But let's just assume there is an end to the fighting at some point very soon. Is that another couple thousand points on this market at? I don't know if it's a couple of thousand points, but it's, it's, it's certainly. certainly higher and it would also, I think, first and foremost, be great for Europe. That's where the problem is, Europe is obviously closest to what's going on between Russia and

Ukraine, though it's kind of can be a little complicated because the defense stocks might go down over there. The defense stocks might go down over here. But yeah, I mean, peace is great. We want peace. And I think the market has been remarkably strong in the face of some pretty scary geopolitical developments ever since Russia invaded Ukraine in 2022. It certainly has.

And I know the world's hoping for some kind of positive news. We'll talk more about it coming up. Ed, you are to any of your Denny research. So really love having you on Power Lunch, Ed. Have a great day. Thank you. My pleasure. All right.

So let's now move from stocks, really to bonds, Treasury yields a little bit higher again. following that PPI number, a little bit of hot a read on inflation. Rick Santelli joining us now from Chicago with the bond report. But again, I guess I'm a little bit vexed. That's a thousand dollar word, Rick, about why we're not seeing a bigger move in bonds or stocks. Yeah, well, those are my decos. PPI hot, claims tame. And the next one, limited treasury reaction to the data.

And I could say limited market reaction. You've said basically the same thing. But guess what? The market has a big opinion here, folks. I'll show you. Here's an intraday of twos and tens on the same chart. Obviously, we could see what happened at 8.30 Eastern. Hot PPI comes out and the rates moved higher.

No matter what part of the curve you looked at. And right now, twos and tens are each up about a half a dozen basis points, basically negating what they gained on the downside yesterday. But here's why the market's got an opinion. Let's go back on all the rest of the charts to a lot of. a couple of sessions before job, job, jobs Friday. And it was a horrible report, right? All right.

Let's look at twos and tens. Well, they had a big drop on jobs Friday. They didn't recoup nearly as much of that drop, which means in the market's eyes, the drop in jobs numbers, the negative revisions in the job numbers, the poor payroll number in the jobs, job, jobs report for July. indeed, well, it's more important to the market than the inflation side, almost the exact opposite of what the Fed speak has been. And if you look at the dollar index, and this is key, same thing. The response, well, the dollar really slid after the weak jobs report, but it didn't make a comeback. Maybe the best chart of all. Fed Fund futures, I will tell you this. If Fed Fund futures

three to five days, three to five sessions in front of a meeting are pricing 55% or higher, the Fed's going to go along with whatever the market says. They do not like to surprise the market. They like to talk it around if they don't agree with it, but wherever it's at, a few sessions before is what they're going to do. And Fed Fund Futures is clear at this point. The big run-up in Fed funds on Job, Jobs Friday means more easing. The fact that it only curled down a little bit today means,

it didn't take nearly all of it back. A market is looking for a rate cut in September, and I don't see any way around it unless the data between now and then does a lot more to affect the market and especially the charts of the market products that I've just shown. Love it, and I love the fact you're dropping Deco

for the people uninitiated. That's the word we use for the graphic below Rick right there. It says PPI hot, it's called the Deco, folks. And knowing is half the battle. All right, staying with the Federal Reserve, of that inflation data nudging some on Wall Street to dial back a little bit, bets on a rate cup in September. But remember, the Fed has two mandates.

One is around inflation. The other one is around jobs. So how do we square all this together? Well, let's bring in the aforementioned Steve Leesman, no doubt, champing at the bit. And it is champing, not chomping, champing at the bit in that last conversation. I chomp and champ at the same time. You are a champ. So Rick is right.

I see a little more movement, though, in the Fed outlook than he maybe sees, which is, if I look, I don't know if the latest probabilities are ready. We just, we just concocted them. We just calculated them. I got the October one, Rick's right, on course, 93% for a September one, but they kind of dialed out the October one and caught. There it is. Actually, that 55 is 52. So yesterday, I think, correct me if I'm wrong, I think September was at 99. yesterday, right?

Right, with like six or seven for a 50. Okay. So it gets to 100. It means a 100% chance of definitely happening a quarter, and then there's some percentage on top of that of a 50. But 93, well, not 99, because math is still a lot. I mean, the odds are clear that a rate cut is expected, or dare I say, wanted by Wall Street.

Yeah, and Rick is right to a point, which is that if the market is priced that way, the Fed is likely to do it, but it is also within the Fed's ability to change that number in the market, right? The Fed chair has not spoken since the job report, hasn't spoken to the inflation report. He may or may not even talk about the outlook for rates next week at Jackson Hole, but he'll have an opportunity to weigh in. The chair is not without copious means of letting the market know what he thinks. And by the way, Brian, we've had a pretty split decision. And Rick mentioned this from Fed Talkers. Arbeta Musalum this morning on CNBC exclusively was kind of neutral.

Jeff Schmidt from Kansas City, he was a big hold guy for September. And you've got Waller and Bowman talking about cutting in September. So there's a split on the committee. Let me ask a stupid question. I doubt it. No, I actually don't know the answer. What would happen if, because you got J. Powell, right? He's the chair, Trump Powell.

If it was like eight against him, would he still win? Or is it literally like a, does his vote count the same? I don't know how it works. It does count the same. Okay. But he's kind of like the chief justice, right? I thought about this. What if the chair found himself on complete opposite side of the majority of his committee?

I don't think we've ever seen this situation like that. It's called five four, right? Five for a cut. He's in the four for no cut. I'm making this. There's 12. 12. So 7.5.

Yeah, and he would be in the minimum. I was confusing then with the Supreme Court. Exactly. But here's the deal. The deal is that the chair has opportunities over time to kind of gauge the temperature of the committee. And his job is in part to steer the committee towards a consensus. That's the way the Fed likes to act. So you can do all kinds of funny things.

How about like a hawkish cut? We're cutting 25, but don't expect another one. Or what about a pause with a hint about a cut in the statement? There's all kinds of horse trading that can go on. here with a question about whether or not. To bring, because he wants consensus. They want to say, they want Steve Lee's been to say on CBC, it was 12-0. It was unanimous.

They don't want somebody to leave the room and say, I voted for it, but it was really dumb. Or something like that. You know, that doesn't know what it works. But again, you've got to watch this September number, jobs and inflation both coming out, and we'll see where the market is priced once those. One of the things that Powell knows is that we have what's called the reaction function, which is the Fed operates under the idea that the market will process how the Fed will think about a number just by doing it automatically. So the CPI comes out and the market automatically adjust its expectations for the Fed based on what it thinks it knows about the Fed.

When do you head to Wyoming? Monday. It could be a good. It's going to be a really interesting Jackson Hall. I'm just interested in how the fishing is going to be. How is it going? It's going to be great. It should be good.

Come on, it's Wyoming in August. It's hopper season. Just watch out for the bears. It's hopper. I don't mean people that are betting against the market. I mean actual bears. Carnivores. Actually, you know what you really have got for?

It's moose. They're big. Much more dangerous. I just got to yell that. Got to go. I know. Camels with antlers. Don't like them.

Steve Leesman, thank you very much. Plenty more to come on power lunch, including an energy shift, why President Trump's meeting with Vladimir Putin could have big implications for oil plus shares of terror, Wolf screaming higher. Big deal with Google.

We are going to speak CEO exclusively Paul Prager on this program. And if the market volatility has got you down, one strategist claims it's got the answer to keep your portfolio up. All right, welcome back to Power Lunch. President Trump preparing to meet with Russia leader Vladimir Putin on Friday in Alaska. Many investors, of course, keeping a close eye on energy and oil and the potential impact on that summit between the two leaders and what impact it might have on global energy prices. but that is only part of the story.

Let's get the rest and why this meeting is so critical on many levels, joining us now with her take and expectation. Lee Mccroft, managing director, global out of commodity strategy, RBC Capital Market, CBC contributor, and, dare I say, am I allowed to say former CIA analyst? You can say that. So you know the defense world. What is an out, what are the scenarios Friday with outcomes for oil and gas?

Do we have any idea? Well, I think a lot of people look at this. meeting and say, sanction reliefs on the table. We start thinking about Russian oil and gas flowing back into Europe. I think that is getting way ahead of ourselves because the sanctions architectures, we've pointed out, like most of the sanctions on Russian energy have been put in place by the Europeans. The United States has not put significant sanctions on Russian energy. We have not sanctioned Ross Ness. We have not sanctioned gas prom. And in fact, because Russian energy has largely flowed, it's no longer going into Europe to the same extent that he used to, but because

this going into Asia, they have the ATM. They have kept the money going. It's allowed Russia to continue to fight this war. And this is, respectfully to all of my colleagues and friends in the media, they've gotten this wrong. A lot of people have gotten this wrong. Russia's economy, while not doing great, hasn't been suffering as much as people thought. Liquefied natural gas, as we've reported, has been flowing. You're talking about the oil sales. And there was an article in the New Times this morning that you actually flagged to me. Stunning honorable. Showing how much money. Here's the graphic. Russians are literally paying soldiers to fight, paying them in some cases

to go die. Three to one against Ukraine. But let's be clear, Russia has money. They have the money to keep the war going. And I can tell you when the war started, there are people like Robin Brooks. He said, Brookings now saying, if you do not sanction Russian oil, but you give Ukraine weapons, essentially it's not a short war scenario. because one side can keep funding the war, the other can keep fighting. That is not a short war scenario. It is a stalemate scenario. And right now, I think the question is, are we in a stalemate, or is Russia actually making

significant tactical games? I'm going to say something I hate even saying. It grosses me out to even say it, Halima, but the reality is this. Trump and Biden have one thing in common. No one wants high oil prices. That's right. They don't want $6 a gallon gasoline. And if we actually sanction Russia, not just say we're going to sanction Russia, wink, wink, wink, right?

And Russia's still able to sell oil, as we reported back in 2022, with this ghost fleet of ships that are uninsured or underinsured. If we really did that, say, you know what? Bad outcome in Alaska really sanctioned. What would happen with energy? $100 a barrel? $120 a barrel? I mean, that's why oil prices ran up initially when the war started.

Yeah, to $125, I think a barrel? There was an expectation that we would do to Russia what we did to Iran in 2012, 2019. We did not impose secondary sanctions. Again, I mentioned gas prom, Ross Neff, not subject to secondary sanctions. And at the time the argument was, sanction Russia but not ourselves. We don't want to pay the higher price for the war. And so now we're at this point where Russia is spending so much money. They're not drafting people to fight.

They're paying people to fight. Literally mercenaries. They're saying to the Russian men. And Russia, folks, I've been to Russia. I'm sure you've been to Russia. Steve Leasbisbisbissela live in Moscow. Russia's a poor nation. Okay.

I'm just going to say it. It's proud people. it's a poor country. The money, if you can make a few thousand dollars extra in Russia as an under-employed man, you're going to do it. I think that was the point of the New York Times article today was these desperate men who may have not a lot of training, they're going to get paid to basically go die. And they're basically now able to recruit a thousand people a day.

Double what Ukraine can recruit. And Ukraine now has a manpower shortage. And it's not just the fact that the Russian. are paying people to fight, look what they've done with the drone factories. Look how they've revamped the old industrial base to be a war machine. Yeah. And by the way, this is not our opinion, folks. If you check out the New York Times. I'll post it. It was a big right through, a very excellent story well reported, I think, by them as well. What's the best outcome then? On Friday for the energy markets, if you had to say that we leave, Friday's over, Putin and Trump leave,

what's our best outcome? What's the most likely outcome? Do we think there's going to be sound bites of diplomatic progress that staves off the secondary sanction threat. Remember, as we were heading in to last week, we were talking about the secondary tariffs on energy in India, basically saying India, we're slapping a tariff on you, an additional 25% because you're taking Russian oil. The talks basically stopped that conversation. So the question is, if you get something that looks like progress, I think that threat potentially is abated. You're not talking about more sanctions on Russian energy. But again, I don't think you're going to get the floodgates of Russian oil and gas into Europe opening any time soon. Nobody's, I mean, there was brief talk about fixing or plugging

the Nord Stream 2 pipeline. Denmark was going to give Russia some right to like patch it, but nobody's talking about turning it back on. Are they? One last thing, Brian, think about the US-EU trade deal. $750 billion in purchases over three years. That's U.S. energy going into Europe. What is the U.S. energy going to back out the remaining Russian flows? this is why we have you on. Thank you so much, Brad. Because you bring it together. It all matters, and it truly is a global commodity market.

Halema Croft, thank you very much. Thank you for having me. Appreciate that. All right on deck. The deal of the day why Google is making a massive deal with Paul Prager's Terrell Wolf as that stock soars, almost 50% higher. Paul Prager here exclusively next. A power deal in AI hosting the descending shares of The Wolf,

soaring Terowulf, signing two, 10-year lease. deals with AI cloud platform fluid stack. It's all at its data center campus in western New York. The deal is worth $3.7 billion on paper with the potential of more than double if two five-year extensions are indeed exercised. Well, Google is a big part of this project, backstopping $1.8 billion of fluid stack's lease obligations and taking an 8% equity stake in Terowulf through stock warrants. Now, on that deal, listen, if Google invest in your company, your stock's going to rip. And Terawolf's stock is up 47% right now. Joining us now with more on this deal in an exclusive Paul Prager, co-founder and CEO of Terrell Wolf. First off, congrats, Paul, to you, your team,

your employees, and your investors. In plain English, what does this deal do for both Terawolf, fluid stack, and Google? You know, I was here early in the winter. And we were at that point discussing our very first tenant, Core 42, G42. Today we announced our second tenant at the site, FluidStack Google. We're building out one of the largest data center campuses at the United States. We're going to be delivering hundreds of megawatts of, you know, AI-ready compute in a multi-billion-dollar deal. It's backed by some of the most respected names in technology and infrastructure. and it is a combination of scale, speed, and world-class partners in Flutes at Google that's

going to set Terawolf apart. And we have had you on with us for about a year now and a lot of people kind of not figuring out the story. This to me, and tell me if I'm wrong, Paul, or if there's any TV hyperbole here, this shows, this deal and others that have been done exemplifies the benefit of having excess power. Does it not? if you are a power producer, you control the cards right now.

Yeah, this is a game changer in the industry. If you have quality energy infrastructure and a management team and folks on the ground that understand how to extract value for it, this is the time. Lake Mariner is the place. Yeah, and Lake Mariner up and upstate New York, hard against the shores of the lake. it got me thinking, Paul, that there are a lot of parts of this country, and you're spending a lot of your own personal money to build out the town of Easton, Maryland on the eastern shore.

You've got this Lake Mariner. There's a lot of parts of this country, I think, that have been ignored for a long time that are going to benefit from this AI boom, right? Up near Rochester, kind of where you guys are, that area, it's had some struggles the last 20 or 30 years. This is not just a deal for you. I feel like these kind of deals breathe new life. into areas that have been, you know, in some ways, passed over.

This is tremendous opportunity for our employees, our contractors, for the state, as well as for our customers. I mean, this is what it's all about. This is a whole new ballgame here. And we're fortunate to have, you know, partnered with Fluid Stack and Google to create what will be the largest state of center in the country. I mean, we're very, very excited about it. and we'll be building it in record time. Yeah, and you want to take it to a gigawatt. That's 1,000 megawatts. I know energy and electricity can be a little bit confusing.

Confuses me sometimes as well. How do you grow, though, Paul? How would you add capacity to either Lake Mariner or do you go out and just kind of try to replicate this model elsewhere? Listen, we're building in phases. We've got 260 megawatts contracted. We've gone exclusive in an option to fluid. at Google for 30 days for an additional 170 megawatts, and I have high, high levels of confidence that that gets taken up. You know, we see a path to more than 1,000 megawatts over the course

of the next few years. We ran a process, and we decided to bring in the Cayuga site, capable of up to 400 megawatts of high-power compute AI. Over the course of last year, we've looked at 75 sites. The unique quality of our team is due to our energy infrastructure experience, you know, which is 25 years or more. We have the ability to sort of get to the right location where we think there's value for high compute AI customer. So we've done that already.

We've brought in Cayuga, so we have more capacity available. But certainly we'll get to over a thousand megs. Is there the infrastructure around Lake Mariner to? grow this project, Paul. In other words, do you have the power lines? It always feels like the problem is like the last mile literally and figuratively. We absolutely do. I mean, we operated this site when it was a former very large coal-fired power plant in the state of New York. We took it down. We mitigated it in partnership with the state. And we determined that the right way to move forward was to turn this into, you know, data centers. Early on, we started with Bitcoin mining.

and now we've evolved to fully focus on high power compute and AI. We have, you know, utility-grade energy infrastructure at the site, and it's one of the reasons why Google and Fluid Stack selected us. Yeah, it's well said. Listen, everything was sort of about Bitcoin and crypto mining a few years ago. It's really pivoted to AI in this fight and this competition for power. Big deal for Terawolf. It's investors and its team, Paul Prager.

Really appreciate you coming on. Thank you. Thank you for having me. All right. Still ahead. Negotiating tactics. What is the proverbial carrot that President Trump could dangle to try to help end the war in Ukraine? All right.

We're just about 24 hours away between that super high stakes meeting between President Trump and Vladimir Putin in Anchorage, Alaska. Some reports suggesting Trump could offer Putin access to rare earth minerals. It's kind of a carrot to help him end the war in Ukraine. Here now with more on what to watch. Michelle Crusher Cabrero, CEO of MCC Global Enterprise, the CNBC contributor. You came up to me before the show and you said commercial diplomacy.

Diplomacy. What is commercial diplomacy? Well, Trump is a deal person and he wants to offer, he's given sticks. He's threatening sticks. Sanctions, right? Sanctions, right? Sanctioning India for buying Russian oil, threatening to sanction Russia if they don't do a deal. The carrot is, these reports,

that there would be a critical minerals deal with Russia. So this is very, very typical Trump. He thinks in commercial ways and he thinks in deal ways. And so I'm not surprised that this would be reported as something that he's going to offer. The question is, does Putin care? Does Putin want it and does Putin care? And, you know, I think the most likely outcome of this meeting

is an agreement to another meeting. I mean, President Trump has said as much. The likelihood of a ceasefire immediately, very unlikely. I would say. Yeah, I think there is a school of thought in diplomacy. I know Winston Churchill said this before the war began, of course, it's before the war began. So then the war ended up beginning, which is basically if you're talking, you're not fighting. But this is not our war. This is Ukraine's land. This is the Ukrainian people. They're proud. Whatever Putin and Trump agreed to, Vladimir Zelensky and the Ukrainian people are going to be the ones who make the decision.

Oh, absolutely. And President Trump has said that as much. The top of your show, Trump was speaking in the White House saying what he wants to do is have this meeting and almost immediately, if possible, have yet another meeting that Zelensky is in at this point. So he's very clear that he wants the two of them to make a deal. The question is what incentives and what sticks can he help bring to the table that might actually bring the two of them together? Well, there's also the other side. We talked about this a little bit with Aleema Croft earlier, which is what if it goes bad? What if this goes wrong? You know, Trump, you know, Putin cusses out Trump. Trump's, they storm off, right? Putin's pissed. Now he's sending more people to die like we just talked about.

What's the negative outcome? There is a negative possibility. And Trump says, fine. We're going to really sanction you this time. Not the sort of the phony sanctions we had on before. Real sanctions. Well, as Halima highlighted. And oil goes to 100 a barrel. There's lots that hasn't been done. You could sanction, you could do sanctions on the shadow fleet, secondary sanctions on anybody doing business with the shadow fleet that you mentioned. These are these old tanks that are out there delivering oil. Shouldn't even be on the oceans, by the way. They should be on the ocean.

They're not insured. They're going to break in half and create an environmental disaster. They're tracking mechanisms. They could start imposing limits on how much LNG they export. They could do secondary sanctions to reduce the amount of LNG that is purchased by European countries. I mean, there's a lot of room because they haven't done secondary sanctions. But that would require economic pain here in the United States and in Europe as well.

Let's be clear. And people can say that's fine. I get it. It's a gross thing to say, but it's the reality. You can say, fine, you know what? We're going to take gas to six bucks a gallon because screw Vladimir Putin.

We're going to bankrupt him. Because as somebody has pointed out, Russia is a gas station with nuclear missiles. Yes. A former president, I think. Yeah, I believe that one. I'm just paraphrasing everybody today. Yeah, I mean, I think that's one of the reasons

why you saw Trump allow Chevron to go back in Venezuela because he's looking for other levers because he does not want oil prices to go higher. He does not want gas prices to go higher. So if he can get production somewhere else, that gives him more leverage with Iran. It gives him more leverage with Russia as well. But if you want to end the war and you want to do it through cutting off their money, which was what we were sold a couple years ago, remember that?

Yeah. We're going to sanction Russia and cut off their money supply. People are like, oh, they're going to be bankrupt in nine months. The Russian economy, by all accounts, who don't have a lot of windows into it, seems to be doing okay. So the Russians themselves say that the last two years, their economy actually grew 4% each year. There were a real...

First off, they're not much of an importer. Right. And the only thing they really exported was energy, and they're still doing that just at slightly lower prices through these old ships. And they're producing all kinds of weaponry. They're doing all kinds of military manufacturing,

which is why you would see their GDP rise up. Where are they getting all this money? Well, they had a very large sovereign wealth fund that they've been eating away at. It used to be more than $180 billion. Now it's roughly $34 billion. So that will run out at some point. That will run out.

So there are some economists who believe that this year is a crucial year when it comes to Russia because they have been eating away through their reserves. That by the second half of the year, they have such a large deficit. The Commerce Minister in St. Petersburg in June at the Big Forum said out loud that he thought the Russian economy might be on the verge of a recession and that they were running out of money, that their deficit was 30% bigger than their target. Why that matters for Russia in particular is they cannot borrow on the international markets.

So we fill our deficit. Why? How? We sell debt. People buy it. Or they can borrow it from China. Yeah. China will loan the money. Maybe. At a price.

At a price. At a high price. But despite the closeness that we see between Russia and China, they've always distrusted each other dramatically. So Putin doesn't necessarily want to do that. But this year could be the year where he faces issues. Well, we shall see, and maybe now is when we turn that screw. We will find out the meeting is tomorrow.

Michelle Crucial-Gabro, great to have you on. Thank you. Pleasure. All right. Let's get out of Bertha Coombs for a CNBC News update. Bertha. Brian, Israel's far-right finance minister announced a plan today to begin work on a long-delayed settlement that would divide the West Bank.

The construction would effectively cut the territory in two parts and could for plans for Palestinian statehood. United Nations and United Kingdom have already registered their strong opposition to the plan, saying it goes against international law. Costco will stop selling the abortion pill Mitha Pristone across all 500 of its U.S. pharmacies. The retailer says the decision was based on lack of demand from its members and other patients who typically receive the drug from a medical provider. It comes as religious activist groups have continued to campaign against the availability of the pill.

And President Trump signed a proclamation today, marking the 90th anniversary of the Social Security Act. The president used the opportunity to tout a provision in his one big, beautiful bill that assists seniors in paying zero tax on Social Security benefits. But experts have warned it could also speed up Social Security's insolvency, which Brian the chief actuary now puts at 2032. Back over to you. That's not that far off. No. No. I know, I know somebody that might be looking at Social Security soon.

Yeah, you might want to start filing sooner. Bertha Coops, thank you very much. Oh, all right. If volatility scares you, your market navigator says he knows exactly where you should invest right now. And that is coming up after the break. CryptoWatch is sponsored by Crypto.com. Crypto.com is America's premier crypto platform. All right, welcome, but welcome back.

Let's get now to the markets and our market navigator. And your next guest says if any volatility for stocks that you think is going to happen scares you, he may have the answer. Let's get that answer. Manjou Berea is head of systemic edge fixed income in all spring investments and joins us now. Manjures a lot of worry about this market, volatility, you know, valuations. If one of our viewers out there believes stocks are going to go down. And if they want to invest in the bond market, fixed income, where do they want to invest now? Hi, Brian. Thanks for having me. So bond markets are pretty interesting now, right? I mean, if you look at what's happening with inflation, we just saw the CPI came out, come out earlier this week. So the headline was actually stable. But the core inflation is actually picking up and actually accelerating. PPI came out this morning. And the producer price index was a higher as well. It was that.

highest jump that you've seen in three years. So just given that and the fact that the growth is slowing and the labor markets are slowing as well, the markets are actually diverging, right? If you look at what the Fed is saying, the Fed is cautious, they want to actually keep the rates stable just because they're more worried about inflation expectations getting out of hand despite the software labor market data. But the markets are actually pricing in a rate cut in September. it's 94% probability right now, and they're pricing in 60 basis points rate cut for the rest of the year. So just given that divergence, I think the best place to invest is let's look at the muni markets. From a muni market perspective, the intermediate part of the munichur is actually where we see a pretty decent reward for, from a risk reward perspective.

So if you look at the short. Go back to that. So we had a graphic up while you're talking, Manju, which is basically, tax equivalent yields close to 5%. That assumes that the capital, your money is not going to move, stay stable. You get 5% on a tax equivalent basis. That's not a terrible number. 5%.

If you're worried about stocks falling or if you're already in retirement, that's a pretty good figure. That is a pretty good figure. And I think that's more, again, in the intermediate part of the curve, Brian. So it's really the 5 to 10 part of the curve. And the reason I think that part of the curve is more critical or more interesting than the short end and the long end, is because the short end is actually going to be influenced by inflation surprises and effect policy changes, right? The long end is going to be driven by the ongoing fiscal concerns. It's going to be driven by what's happening with the term premium. But the five to

ten part of the curve is the sweet spot. So that's really where that tax equal and yield is like 5%. So just given the risks, I think that's a great, compelling place to be. Yeah, especially See if you're of a certain age where you want to just preserve that capital and not risk it. There you go. Manjou Berea of Allspring, Manjou, pleasure to have you on Market Navigator. Thank you. Thanks, Brian. All right.

Still ahead. We talk a lot about drill, baby drill, but we're going to show you a sign suggests that U.S. oil production maybe set to go down. It's coming up. All right, welcome back. Time for an RBI and this one. Also on oil and gas, because outside of all we just talked about, there's something really interesting going on that is not getting a lot of attention. And that is the number of

work crews for oil drilling in America are going down. Now, this chart is technically what they call frack spreads. It's basically the number of work crews that are operating right now in the United States. Now, earlier today, I spoke with Tom Laughey at Energy Intelligence firm Flow Partners. And he said this chart, which he posted originally to X, indicates to him that future drilling activity is going to go down, in part because many oil companies think the price of oil in America will keep going down. And it's also because big oil companies need to maximize their free cash flow now, not five years from now, right now. Now, American oil drilling is still near record highs. We've learned to do more with less. But if this chart tells any story, it's that output may,

may be going down very soon, and it also is maybe why OPEC keeps raising its own production. We'll see. U.S. production down? Global production up? Could happen. Random, but interesting. All right, still to come. The prediction that one of our guests absolutely nailed in yesterday's show.

All right, before we go and hand it over to closing bell, we want to take a look at shares of deer, formerly known as John Deere, the tractor company. They're down right now about 6.5%. It's on earnings, guidance, and tariff fears. But you should not be that surprised. If you tuned into Power Lunch yesterday, and I'm sure you did. You heard this from Lee Munson.

I was longed this earlier this year. For full disclosure, I sold some yesterday. I don't want to go into earnings on it. And take my big profits this year, and I'm just going to sit it out. Hey, Lee, good call. And not a fun fact, Deer is having its worst day in more than three years. Down only 6.5%. But the stock, not a big mover historically and now down 6.5% Lee Munson,

absolutely nailed it. Let's take a quick look before we go at the NASDAQ. Stock futures are down pretty good this morning on that hotter PPI number. Guess what? We're down. We'll call it flat. See what happens in the final hour of trading. But that's for closing bell to do, and it starts right now.